Mortgage News

Mortgage Prequalification – Know your credit score

Before you begin the mortgage prequalification process, you should know your credit score and what to expect. If you’re beginning the process of purchasing a new home, request a copy of your credit report before you meet with a mortgage specialist. Knowing what’s in your credit report can ensure you don’t have any unpleasant surprises once you get started.

Your credit score plays a major role in qualifying for a mortgage and the interest rate you will pay. Many potential home owners face delays and suffer increased frustration because of errors on their credit reports that aren’t discovered until the prequalification process begins. To prevent unnecessary delays, check your credit report before you meet with a lender.

You should request a copy of your credit report from the top three agencies, Equifax, Experian, and Trans Union as soon as possible. Once you receive the report, you’ll want to first check for errors and file a dispute as soon as you find them. It can sometimes take a while to clear up errors, so the more time you give yourself to correct errors, the better.

Next, check your score. If you’re carrying high balances on your credit cards, pay them down. Lenders like to see a good ratio between your available credit and your balance. They’re not as concerned with the number of credit cards you have as they are with the debt ratio. Lenders like to see a long history of good credit, so don’t close out old credit card accounts.

It’s important to remember that the higher your credit score, the lower your interest rate will be.